PRESIDENT Hakainde Hichilema says his government has inherited an empty Treasury. Some critics have found this statement somewhat irresponsible for a Head of State given the country’s debt position and other macroeconomic factors. Our position is that if what the President said is the truth, then nothing else matters more because the people who elected this government want to see transparency and accountability from their leaders.
Speaking when he featured on a special BBC interview, President Hichilema also said the amount of illicit cash that some people have been trying to move out of the country is horrifying.
HICHILEMA: “We are picking issues in terms of movement of cash, which is really not supposed to be the case. We are beginning to pick a lot of illicit movements of funds. I don’t want to pre-empt things but what we are picking is horrifying. They are still trying to do things now even when we made pronouncements very clearly that we want to stabilise the country. People are still trying to make last minute movements of funds which are unauthorised, which are not theirs.”
This is not something that came as a surprise to us because we have heard this from sources within Zambia and in jurisdictions where the said money is being stashed. The numerous attempts by some politically exposed persons to send illicit money to some offshore accounts is worrying, but we believe that as long as institutions such as the Financial Intelligence Centre and the Drug Enforcement Commission are allowed to operate independently, then this money will be followed and the culprits will be brought to book.
What should worry us more is the money that these politically exposed persons are keeping in their houses. During the last five years or so, people who worked in government or with the government made so much money through corrupt deals than this country has seen before. But we need to find a way of dealing with these criminals who are holding cash at home or underground.
One measure that comes to mind is the change of currency. Even from the perspective of monetary policy, demonetisation has several possible benefits.
If we consider changing our currency, people will be forced to deposit cash with banks and therefore keep less at home. Changing currency will help the government to curb criminal activities including smuggling, terrorism, counterfeiting, tax evasion and money laundering. We need the Central Bank to strengthen its control over the currencies in circulation and smoke out the old unaccounted-for cash.
This may appear to be a costly undertaking, but we believe that whatever the cost may be, it would be less than the economic benefit. Right now, there is a lot of Kwacha that is not in circulation because it was illicitly acquired. The people who cut multi-million dollar deals are afraid of being seen to be overspending, so they have elected to keep their money at home, in their bedrooms and over in the ceilings. We need that money back. What has been happening since the elections is that these people have been changing this money into dollars because they want to externalize it.
We urge the new government to consider introducing new K100, K50 and K20 notes. Once this decision is arrived at, our citizens can then be given a period of about a month or two in which to give away all old notes in exchange for new ones. All the money that criminals are keeping underground will be brought out and poured back into the economy.
The other benefit to this is that those who have bulk cash at home would be identified. There is no way criminals can manage to change the volumes of money that they are keeping at home without being traced. Whoever says “nisakila change ya K2 million” becomes a customer for DEC.
The government needs to introduce a policy whereby whoever wants dollars must first change the old money into new notes by depositing it in their bank account. No buying dollars with old money from the bureau. With this measure, banks would also be guided to stop over-the-counter forex transactions, unless the client wishes to buy dollars with the new currency.
As a country, we need to do whatever we can to get back this money into the economy. We cannot be a country with an empty treasury, yet people are keeping millions at home. Remove one zero from the kwacha to confuse them.